What is the Dow Jones? | AvaTrade Tutorial

The Dow Jones Industrial Average is one of the most watched indexes in the world. It claims to represent the entire stock market with just 30 stocks, which span different sectors. Big names like Apple, Boeing, Microsoft, Coca-Cola, and Exxon.

Not to be confused with Dow Jones and Company, which is a huge financial news company that actually started the DJIA and various other indexes. The DJIA was created in 1896 by Charles Dow and his partner Edward Jones.

The performance of the Dow Jones is a way to take the temperature of the US economy as a whole. It is the most widely used index in the US, ranking above the S&P and the NASDAQ in importance. When traders ask how New York is performing, they tend to be referring to the DJIA.

This index is a price-weighted index, which means that the stocks with higher prices inside will carry more weight. If one of the firms that has a lot of weight inside the index were to declare bankruptcy this would send the index plummeting.

So what moves the DJIA? Factors include stock performance of the companies that make up the index, and economic factors such as interest rate changes, monetary policy and economic data releases.

Remember you can trade the Dow Jones industrial Average either when it is rising or falling with CFDs here at AvaTrade. You can use the MT4, the MT5, the WebTrader or our AvaTradeGo app.

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